by Julia Pyper
August 07, 2019

Competition in the electric vehicle market is intensifying, but many automakers realize they can’t go it alone.

To date, 36 companies investing in transportation electrification have established some type of partnership with another automaker, according to EV consulting firm Atlas Public Policy. More are likely coming.

“Partnerships between automakers are crucial to diffuse risks and manage uncertainties while developing new technologies and manufacturing processes. It is likely these alliances will continue to shift and strengthen as commitments to electrification continue to pile up,” the firm stated in a blog post.

Bringing electric vehicles to the mainstream will require collaboration not only between automakers, but also between auto companies and policymakers, and even automakers and oil companies. These alliances help to guide investments in EV technology and manage risks.

Such partnerships may prove critical to the advancement of electric vehicles as automakers struggle to manage costs and expand customer adoption. Global EV sales have fallen short of projections from J.D. Power and Associates. EV sales in the U.S., meanwhile, just saw a year-over-year decline in July.

But while U.S. sales have been sluggish, it’s been a busy summer so far for EV partnerships. Here are seven recent agreements to keep an eye on:

1) Major automakers team up with California on emissions standards

California has worked hard to clean up its air over the past 50 years, and it is not about to give up on that progress now.

On July 25, the Golden State and a consortium of automakers announced a new framework agreement to reduce greenhouse gas emissions that's designed to serve as an alternative path forward for clean vehicle standards nationwide. The voluntary agreement comes as the Trump administration prepares to roll back Obama-era clean vehicle standards and revoke California’s right to set its own emissions targets. Governor Gavin Newsom urged the Trump administration to abandon its proposed rule change in favor of the compromise.

California is the largest state economy and auto market in the United States. In addition, 13 other states have adopted more stringent standards modeled on the Golden State’s Zero-Emission Vehicle program. Under the new accord, participating auto companies will only sell cars in the U.S. that meet the agreed-upon standards.

Ford, Honda, BMW of North America and Volkswagen Group of America all signed onto the voluntary agreement, which proposes that automakers operating in the California market reach an average fleetwide fuel economy of 51 miles per gallon by 2026 as opposed to the 52.5 miles per gallon by 2025 established by the Obama administration.

The deal also encourages the transition to electric vehicles by rewarding companies that sell more EVs with additional credits to meet the emissions standard. Automakers are also incentivized to install more emissions-reducing technologies, such as making the car more aerodynamic and improving the vehicle’s internal temperature control.

The agreement simplifies compliance by removing the requirement to consider upstream greenhouse gas emissions associated with the production of the electricity used by electric vehicles when calculating the emissions footprint for an automaker's fleet.

Automakers said their decision to strike a deal with California was driven by a need for policy predictability, as well as a desire to reduce compliance costs, keep vehicles affordable for customers and be responsible environmental stewards. At least 17 automakers and 23 governors (including several in states that went for Trump in 2016) have called on the administration to halt the rollback of clean car standards.

“These terms will provide our companies much-needed regulatory certainty by allowing us to meet both federal and state requirements with a single national fleet, avoiding a patchwork of regulations while continuing to ensure meaningful greenhouse gas emissions reductions,” the group said in a joint statement.

If the White House does not agree to join with California and the four automakers, “we will move forward with our current standards but work with individual carmakers to implement these principles,” said California Air Resources Board Chair Mary Nichols. “At the same time, if the current federal vehicle standards proposal is finalized, we will continue to enforce our regulations and pursue legal challenges to the federal rule.”

2) China’s Didi and BP join forces to build EV chargers

A British multinational oil and gas company and a Chinese ride-hailing platform walk into a bar…and walk out with a joint venture to support vehicle electrification.

Well, at least the JV piece is accurate.

Earlier this month, BP and Didi announced a partnership to construct as many as 200 EV charging stations in China by the end of 2020. The companies previously collaborated on a fast-charging station in May.

The charging station buildout is intended to provide an improved experience for the estimated 600,000 EV drivers on Didi's platform. Chargers built under the BP agreement will also be available to non-Didi drivers, which will support the ride-hailing company’s broader ambitions. The 200 JV stations will connect via Xiaoju Automobile Solutions (XAS), Didi’s one-stop automotive solutions platform, where the company aggregates its mobility services. Didi has invested heavily in the platform to diversify its services beyond ride hailing.

For BP, the JV will provide an entry point into China’s massive EV market. While EVs threaten BP’s core fossil fuel business, oil majors around the world are beginning to hedge against the decline in fuel use by investing in electric transportation services. Royal Dutch Shell and Total have also made significant investments in EV charging.

BP believes the Didi joint venture can be scaled up to thousands of charging hubs across China “to reach a leading market position with unmanned and remotely controlled sites, separate from BP’s roughly 700 retail sites in the country,” a company spokesperson told Reuters.

The building experience in China will also help to expand BP’s advanced mobility services business worldwide.

3) Ford and Volkswagen deepen EV/AV partnership

On July 12, Ford and Volkswagen announced a deepening of their global alliance to facilitate the development of electric and autonomous vehicles.

On the EV front, Ford said that it plans to use Volkswagen’s electric vehicle architecture and Modular Electric Toolkit (known as MEB), to build at least one high-volume electric vehicle for sale in Europe starting in 2023. CEO Jim Hackett said that Ford will introduce four new nameplates for the European market in the next five years, “including a new fully electric Mustang-inspired utility vehicle.”

In addition, Volkswagen said it would invest $2.6 billion in the autonomous platform company Argo AI by purchasing shares from Ford over the next three years. The deal will make both automakers majority owners of Argo, boosting the startup’s valuation to more than $7 billion.

Through the expanded partnership, both automakers hope to achieve economies of scale for both types of vehicles, but especially EVs, due the capital-intensive nature of technology and limited consumer acceptance.

4) BMW and Jaguar Land Rover team up in Munich

On June 5, BMW and Jaguar Land Rover announced they are joining forces to develop next-generation electric powertrains. The partnership will consist of a team of experts from both companies located in Munich that will be “tasked with further developing the Gen 5 power units with the production of the electric drivetrains to be undertaken by each partner in their own manufacturing facilities,” according to a joint press release.

Auto industry joint ventures tend to be vaguely defined. But in this case, Land Rover is specifically interested in BMW’s fifth-generation powertrain technology. According to Electrek, the electric drive units are designed to pack a lot of power in a very small format.

Through the collaboration, the two automakers hope to shorten their development timeline and bring state-of-the-art technologies to market more rapidly.

“The automotive industry is undergoing a steep transformation,” said Klaus Fröhlich, member of the board of management for development at BMW, in a statement. “We see collaboration as a key for success, also in the field of electrification.”

5) Subaru and Toyota partner to build large-format EVs

Subaru is developing an EV, but it isn’t doing it alone. The Japanese automaker initially partnered up with Toyota, Mazda and vehicle parts manufacturer Denso in 2017 to make its foray into the electric vehicle market. Subaru joined the coalition to acquire the basic technology needed to develop a new Subaru EV, slated to launch in the 2021-2022 timeframe.

On June 6, Subaru announced a new partnership with Toyota to build midsize and large segment battery electric vehicles under each brand. Subaru will reportedly use electric drivetrain technologies from the partnership to build new all-electric Outback, Forester and Crosstrek vehicles.

Subaru has a history of being fiercely independent but has been increasingly collaborating with Toyota over the past decade. Both companies are considered laggards in the EV space, as neither have released a fully electric vehicle to date. The new partnership could help the automakers play catchup. Subaru and Toyota did not release a timeline for the release of their jointly developed electric SUVs.

6) Toyota and BYD to create EVs for China

Toyota is looking to gain a stronger foothold in China’s massive auto market through a new joint venture to build battery electric vehicles (BEVs) with China-based BYD. The two companies will collaborate on making electric sedans and electric SUVs slated to launch in the 2020-2025 timeframe. The partnership, announced July 19, also includes the development of batteries for the jointly made BEVs as well as other vehicles.

“To curb global warming, both BYD and Toyota seek to reduce [carbon dioxide] emissions by promoting the widespread use of BEVs,” according to a Toyota statement. “To accomplish these goals, both companies believe there is a need to put aside their rivalry and collaborate; therefore, the two companies have agreed to jointly develop BEVs.”

Joint ventures are common in the Chinese automotive market. Foreign brands looking to break into China were traditionally required to form a JV with a domestic company. The central government has relaxed those rules on paper, but there are still restrictions on foreign automakers. In addition, partnerships continue to provide functional benefits in China’s rapidly evolving vehicle market.

For Toyota, the BYD agreement presents an opportunity to made headway in China, where the Japanese automaker has struggled in the past. Toyota has also been slow to embrace EVs, focusing instead on hybrid and fuel cell vehicles. The company is now looking to narrow the gap with competitors GM and Volkswagen with an annual sales forecast of 5.5 million EVs globally in 2025.

7) Renault invests in China’s Jiangling

Renault SA announced last month that it will invest $144 million in a joint venture with state-owned Chinese automaker Jiangling Motors Corp. to develop EVs in China. The July 16 news came just days before Toyota unveiled its new partnership with BYD.

Virtually all major automotive brands are pursuing partnerships to build and sell in EVs in China. Ford Motor Co. announced in June that it will soon release a small electric SUV, dubbed the Territory EV, through an existing relationship with Jiangling.

With the new joint venture, Renault will take a 50 percent share in Jiangling’s EV subsidiary, Jiangling Motors Electric Vehicle Co., which ranks fifth among domestic EV makers. The deal represents Renault’s third JV in the China market.